Case Digest (G.R. No. L-56655)
Facts:
In Datu Tagoranao Benito v. Securities and Exchange Commission and Jamiatul Philippine-Al Islamia, Inc. (G.R. No. 56655, July 25, 1983), petitioner Benito subscribed to 460 shares of Jamiatul Philippine-Al Islamia, Inc. (formerly Kamilol Islam Institute, Inc.) upon its incorporation with an authorized capital of ₱200,000 in 1959, of which ₱80,580 was initially subscribed and paid. On October 28, 1975, the corporation filed with the SEC a certificate increasing its authorized capital to ₱1,000,000, of which ₱110,980 worth of original unsubscribed shares and ₱160,000 of newly authorized shares were subsequently issued without notifying Benito. Believing his pre-emptive right violated and alleging illegality in the failure to notify stockholders of the November 25, 1975 meeting that approved the increase, Benito petitioned the SEC on November 18, 1976 to cancel the additional issues, compel registration of 2,540 shares he had acquired from majority stockholders, and order an accounCase Digest (G.R. No. L-56655)
Facts:
- Incorporation and initial capitalization
- On February 6, 1959, respondent Jamiatul Philippine-Al Islamia, Inc. (originally Kamilol Islam Institute, Inc.) filed its Articles of Incorporation with the SEC, approved December 14, 1962.
- Authorized capital stock was ₱200,000 divided into 20,000 shares at ₱10 par; 8,058 shares (₱80,580) subscribed and fully paid. Petitioner Datu Tagoranao Benito held 460 shares (₱4,600).
- Increase of capital and additional issuance
- On October 28, 1975, the corporation filed a certificate increasing authorized capital from ₱200,000 to ₱1,000,000. At the November 25, 1975 stockholders’ meeting, ₱191,560 worth of shares were represented and approved. ₱110,980 of the originally unissued ₱200,000 were subsequently issued. Of the new total, ₱160,000 worth of shares were subscribed by Mrs. Ramos, Mrs. Lucman, and Moki-in Alonto.
- Petitioner’s SEC petition and proceedings
- On November 18, 1976, petitioner filed a petition before the SEC alleging violation of his pre-emptive rights over the ₱110,980 additional issuance and the illegality of the capital increase due to lack of notice. He prayed for cancellation of shares, registration of 2,540 shares acquired from the Alontos, and an accounting.
- Respondents denied the allegations, asserting no cause of action and that petitioner held the certificates only as collateral for loans to the Alontos.
- On July 11, 1980, Hearing Officer Macalalag ruled the additional issuance valid and not subject to pre-emptive rights; ordered cancellation of Alontos’ certificates and issuance of new ones to petitioner; directed compliance with annual filing; declared the 1976 trustees’ election irregular and ordered a new meeting. The SEC En Banc affirmed on March 9, 1981.
- Petitioner then appealed to the Supreme Court, challenging (a) the validity of the 110,980-share issuance, (b) the capital increase to ₱1,000,000, and (c) his entitlement to attorneys’ fees and damages.
Issues:
- Whether the issuance of ₱110,980 worth of previously unissued shares without stockholder consent violated petitioner’s pre-emptive rights.
- Whether the increase in authorized capital from ₱200,000 to ₱1,000,000 without express consent or waiver of stockholders was invalid.
- Whether petitioner is entitled to attorneys’ fees, damages, and litigation expenses in challenging the directors.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)